Kuwait – MNE Tax — Advance Payment Mechanism

At a Glance

• Kuwait's Ministry of Finance has issued Circular No. 1 of 2026, introducing an optional Advance Payment System for MNE Groups subject to Pillar Two Domestic Minimum Top-up Tax (DMTT) under Decree-Law No. 157 of 2024.
• Eligible Constituent Entities (CEs) may settle estimated tax due for Fiscal Year(s) ending on or before 31 March 2026 ahead of the DMTT filing deadline.
• Enrollment deadline: 31 May 2026. Payment deadline: 30 June 2026
• Available incentives: Enrolled entities receive priority processing on tax inspection, refunds, controversies, and Tax card issuance/renewal.
• Action required now: eligible entities should assess participation before the enrollment window closes.

1- Background and Context

Kuwait enacted the Tax Law on Multinational Entity (MNE) Groups through Decree-Law No. 157 of 2024, aligning with the OECD/G20 Inclusive Framework's Pillar Two global minimum tax initiative. The law primarily implements the DMTT, ensuring that large MNE Groups (with consolidated group revenues of EUR 750 million or more in at least two of the four preceding Fiscal Years) operating in Kuwait are subject to an Effective Tax Rate (ETR) of at least 15%.

The Executive Regulations of the law were subsequently issued by Ministerial Resolution No. 55 of 2025, establishing detailed procedural and compliance requirements, including provisions for filing the DMTT return/ GloBE Information Return (GIR).

Against this backdrop, Circular No. 1 of 2026, issued by the Undersecretary of the Ministry of Finance on 29 April 2026, introduces a transitional, voluntary mechanism allowing CEs to make advance payment of anticipated tax liabilities before the final DMTT return’s due date. This is a significant administrative relief measure, and its logic is clearly rooted in revenue collection efficiency by the MoF, early compliance facilitation, and reducing taxpayer burden at year-end filing time.

2- Key Facts at a Glance

3- Article-by-Article Analysis and Commentary

Article One: Definitions — Establishing the Lexical Framework

The Circular opens by anchoring three defined terms to the broader MNE Tax Law. This is consistent with good legislative drafting practice and ensures that the Circular operates within, rather than independently of. the primary legislation.

Article Two: Scope of Application — Who Is Covered and When?

The Circular is addressed to CEs that are subject to Kuwait's MNE Tax Law. In GloBE terminology, a CE is any entity that is a member of an MNE Group — whether it is the Ultimate Parent Entity (UPE), an Intermediate Parent Entity, or any other Group member with operations or a permanent establishment in Kuwait.

The critical temporal boundary: the Advance Payment System applies only to Fiscal Year(s) ending on or before 31 March 2026. This means the system is designed as a transitional measure for early-year adopters — specifically for MNE Groups whose first Fiscal Year under Kuwait's DMTT regime is already closed or closing.

Our comments:

Kuwait's DMTT regime took effect for Fiscal Years beginning on or after 1 January 2025 (for calendar-year groups) or equivalent periods for non-calendar-year groups. By capping eligibility at FY-end 31 March 2026, the Circular targets the first group of taxpayers whose initial DMTT Fiscal Year has already concluded, allowing them to make advance payments while the detailed DMTT computations are being finalized.

Article Three: Controls and Procedures — The Step-by-Step Mechanics

This Article is the operational heart of the Circular. It establishes a five-step sequence:

1. Enrollment: The Designated Filing Entity (DFE) submits a formal enrollment request to the Department of Inspection and Tax claims (DIT) - Ministry of Finance by 31 May 2026, on behalf of the MNE Group's Kuwait CEs.
2. Preliminary computation: The DFE computes the DMTT due on a consolidated basis for all Kuwait CEs (Jurisdictional basis). Critically, where any individual CE or sub-group requires a separate ETR calculation, due to structural differences in ownership, income streams, or GloBE entity classification, a separate mandatory exhibit must be completed and attached to the Preliminary Tax Return for that entity or sub-group.
3. Single payment: The total estimated DMTT (aggregating the group-level computation and any separate exhibit amounts) is settled in one lump-sum payment by the DFE, accompanied by the Preliminary Tax Return and all required exhibits, no later than 30 June 2026.
4. Advance credit: Amount paid is treated as advance payment and credited against the final tax liability computed in the final DMTT return.
5. Final settlement: The amount paid is reconciled (topped-up or refunded as applicable) upon the final DMTT return submission within the statutory deadline under Law 157/2024.

Our comments:

Based on our conversation with the KTA, we understand that the enrollment process involves simply submitting a letter of intent referencing Circular No. 1 of 2026, and no specific template is required.

The Circular adopts a DFE - centralized filing model: one enrollment, one Preliminary Tax Return, one payment — all submitted by the DFE on behalf of the Kuwait group. However, the estimated computation underpinning that single filing may be multi-layered.

Where the blended group ETR does not accurately reflect the position of all Kuwait CEs. For example, Joint Ventures, Minority-Owned Constituent Entity sub-groups, or entities benefiting from special tax treatments — a separate exhibit is mandatory for each such entity or sub-group. The advance payment is therefore a composite figure, not a simple single-ETR calculation.

Groups with complex ownership structures in Kuwait cannot assume that one ETR model covers their entire filing obligation.

Article Four: Benefits — The Incentive Architecture

This Article provides the commercial rationale for voluntary enrollment by attaching two meaningful administrative benefits:

• Priority processing of tax inspections and the issuance of Tax Assessment Notices, as well as expedited review of refund requests, objections, and tax controversies — specifically for the Fiscal Years covered by an advance payment.
• Priority in the issuance and renewal of the Tax card (the compliance clearance document required for commercial and regulatory purposes in Kuwait).

Our comments:

Priority processing is a tangible, high-value incentive for MNE Groups. Tax Card in Kuwait are often required to renew commercial licenses, execute government contracts, and satisfy banking covenants. Faster issuance directly reduces business friction. The logic is a deliberate policy trade-off: the Tax Administration gains early revenue and a preliminary assessment base; the taxpayer gains reduced administrative uncertainty and faster clearance.

Article Five: Entry into Force — Immediate Effect

The Circular takes effect from the date of its issuance — 29 April 2026. There is no phase-in period. Given that the enrollment deadline is 31 May 2026 (only 32 days away), entities must act promptly.

4- Critical Timelines

5- How Deloitte Can Help

Deloitte's Kuwait and regional Pillar Two Tax teams are ready to assist your Company/Group in navigating this new requirement. Our services include:

• Eligibility assessment: Determining whether your CEs qualify for the Advance Payment System and whether participation is strategically beneficial.
• GloBE / DMTT modelling: Preparing or reviewing the preliminary Pillar Two computation for the relevant Fiscal Year(s), including applicable Safe Harbour analyses.
• Preliminary Tax Return preparation: Assisting with the completion and submission of the Preliminary Tax Return form as per the template accompanied by the Circular.
• Enrollment process management: Drafting and submitting the enrollment request to the DIT on your behalf.
• Ongoing compliance support: Full-cycle DMTT return preparation and filing, including reconciliation of advance payment and final DMTT liability.
• Monitoring and advisory: Tracking supplemental KTA guidance and advising on its implications as they arise.

For further information or to discuss how this Circular affects your Company/group, please contact your usual Deloitte Kuwait engagement team or reach out to our Tax leadership below.